U.S. indicts more Ryan insiders

Safe Road probe accuses trio in $2.8 million kickback scheme

A member of Gov. George Ryan's inner circle of political advisers was indicted Tuesday on charges he improperly wielded influence over the secretary of state's office while it was headed by Ryan, fixing numerous contracts and leases and pocketing nearly $3 million in kickbacks and illicit profits.

The indictment alleges that Lawrence E. Warner used his high-level connections to get the secretary of state's office to lease buildings he secretly owned. Warner also is charged with steering lucrative contracts for license plate stickers and digital licenses to vendors he shook down for payoffs, sharing the proceeds with a high-level secretary of state official that prosecutors declined to identify.

Also charged were Donald Udstuen, an influential player in Republican state politics who was accused of sharing in the kickbacks, and Alan A. Drazek, who is alleged to have used his direct mail company to disguise the illegal payments.

"For the better part of a decade in Illinois, when it came to contracts and leases with the secretary of state's office, the fix was in for a price," U.S. Atty. Patrick J. Fitzgerald said in announcing the 11-count indictment. "And today a grand jury alleged that the fix was a defendant named Larry Warner."

The indictments Tuesday mark the second time in as many months that federal prosecutors have reached into Ryan's inner circle as part of their ongoing investigation into allegations of corruption in the secretary of state's office during Ryan's tenure. In April two former top Ryan aides, including chief of staff Scott Fawell, were indicted along with Ryan's campaign fund.

Udstuen, who authorities said is cooperating with investigators, and Warner are part of Ryan's "kitchen cabinet" of prominent advisers. Warner has hosted and organized the traditional Election Day luncheon for Ryan and helped roast him at a black-tie charity dinner in Springfield during his tenure as secretary of state.

Udstuen and the clout he carried as a former top official for the Illinois State Medical Society made him an influential political player in Republican politics. In the last three years, the physician lobby's political action committee has donated more than $1.2 million to the state's politicians, with most of the money earmarked for Republican candidates.

Warner, who disclosed in an ethics filing last summer that he was an investor in a Kankakee cigar store owned by Ryan's son George Jr., was appointed by Ryan to the Metropolitan Pier and Exposition Authority that runs McCormick Place and Navy Pier. The governor appointed Drazek to the Chicago Transit Authority.

The charges against Warner, Udstuen and Drazek bring to 51 the number of indictments in the federal Operation Safe Road investigation since it began in 1998, the year Ryan was elected governor.

The charges allege that Warner, who is accused of racketeering, was an active participant in running the secretary of state's office during Ryan's tenure, attending policy meetings and directing department heads on who should get contracts. The access gave Warner inside information, allowing him to profit, the charges allege.

Warner is alleged to have made $2.8 million by fixing three leases, including one first disclosed by the Tribune in 1999 on a Joliet facility, as well as four contracts.

Warner's lawyer, Edward Genson, denied any wrongdoing on his client's part. "Larry Warner paid no one any money," Genson said. "Because the government wanted him ... they've reached out and made charges which are patently not true."

Udstuen's lawyers, David Stetler and Corey Rubenstein, said their client will plead guilty to a tax offense. Drazek's attorney, Dennis Berkson, said Drazek would fight the charges.

In a statement issued by Ryan's office, the governor said he was saddened by Warner's indictment.

"Gov. Ryan has always believed and expected that all contracts and leases would be handled according to the law and would not condone anything else," the statement said. "In 30 years in state government, Gov. Ryan has never personally profited from his service."

According to the indictment, Warner and Udstuen hatched the kickback scheme in early 1991.

Udstuen has told authorities that Warner agreed to give him a third of the kickbacks from companies willing to pay to keep or obtain secretary of state contracts.

Udstuen said he was told by Warner that Warner would also share the kickbacks with a high-ranking secretary of state official--identified by authorities only as "SOS Official A"--who had signed off on the scheme, the charges alleged.

To conceal the money trail, the two allegedly secured Drazek's participation so checks could be funneled to his company, American Management Resources, the indictment charged. Drazek cashed the checks, gave the money to Udstuen and kept a portion for himself, authorities said.